Robert Hahn is director of economics at Oxford’s Smith School, professor of economics at Manchester, and a senior fellow at the Georgetown Center for Business and Public Policy. Hahn previously served as the Director of the AEI-Brookings Joint Center.
Peter Passell is a senior fellow at the Milken Institute in Santa Monica and the editor of its quarterly economic policy journal, The Milken Institute Review.
They co-founded Regulation2point0.org (http://regulation2point0.org), a web portal on economic regulation.

Big Numbers, Small Numbers

Mobile telecom devices (basic cell phones, smartphones, wireless tablets) are everywhere these days, and anybody who’s paying attention knows that business has grown from big to awesome at the refresh rate of an active-matrix organic light-emitting diode screen. But the U.S. numbers, reported in a proprietary analysis by the wireless industry’s trade association (the CTIA), are still breathtaking.

The total number of wireless subscribers in the U.S. has risen from 4.3 million (served by 4,800 cell towers) in 1990 to 293 million (served by 252,000 cell towers) today.

The total capital invested in the wireless networks is up from $5.2 billion in 1990 to $292 billion in 2010.

Industry revenues have increased from $4 billion to $156 billion in the same two-decade span.

The number of text messages sent ballooned from 57 billion in 2005 to 1.8 trillion in 2010.

Actually, we’ve saved the most impressive statistic for last. There’s no question that the quality of service (in terms of coverage and dropped connections) has greatly improved since 1990. Ditto for the scope of services offered: Then, it was a voice-only service. Meanwhile, the hardware and software packed into a modern wireless handset now rivals the complexity and cost of a laptop PC with all the bells and whistles. Yet the average monthly bill (which typically includes most of the cost for the handset) has declined from $83.94 to $47.47.

A miracle, you say? Well, in a sense: the technology underpinning the wireless revolution is simply jaw-dropping. But we’d give some of the credit to market capitalism (which has been taking its licks in public opinion in recent years). More accurately, to competition, which has forced the wireless carriers to pass on to consumers most of the difference between what it costs to deliver the services and what they are worth.

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